Lebanon: Business Environment

Accounting Rules

Tax Year

The fiscal year begins on 1 January and ends on 31 December of the same year.

Accounting Standards

Lebanon has tried to reorganize its economy after 16 years of civil war, and part of this has been establishing accounting standards. They are close to those of the IASB (International Accounting Standards Board).

Lebanon has introduced obligations regarding accounting and financial matters through decrees. Annual financial reports must be realized in accordance with the standards in force. They must therefore include:- a balance sheet- a profit and loss account- notes to the accounts- a cash flow statement.

Publication Requirements

All financial intermediation institutions must publish their financial statements periodically, their balance sheets linked to their operations and their accounts which must reflect their real financial situation.

The control of accounts is compulsory and must be made by an auditor independent of the company. This independent auditor must be registered by the Lebanese Association of Certified Public Accountants and the Middle East Society of Associated Accountants or be a member of the IASC.

Corporate Taxes

Gains on the sale of fixed assets are principally taxed at a rate of 10%. However, gains, or a proportionate part thereof, are exempt of tax where the proceeds are invested in the construction of flats for company staff.

Main Allowable Deductions and Tax Credits

Local or foreign firms who set up business in disadvantaged areas or in certain sectors (agrifood, agriculture and IT), under certain conditions concerning the amount invested, number of jobs, and economic, environmental and technological impact, can benefit from total or partial exemptions.

Other Corporate Taxes

There are different sorts of extra taxes: stamp duty on contracts and bills, forming, propagation or transformation of companies, tax on advertising, registration tax on real estate. A municipal tax is also levied. It is calculated annually on the basis of the rental value of the buildings. The rate is 7% for companies, to which 1.5% must be added for the maintenance of the sewerage system and roads. The total amount must be equal to LBP 50,000 at least. Finally, a professional tax has just been set up. It applies to capital companies, partnerships, individual companies, commercial activities and the liberal professions. Access the Investment and development authority of Lebanon website for additional information.

There are allowances according to the domestic situation: Single individual: LBP 7.5 million Married Couple: LBP 10 million Married Couple (spouse works): LBP 7.5 million each Children: LBP 0.5 million per child.

Registration of patents and trademarks is on a first-in-time, first-in-right basis, so it is advised to apply for trademark and patent protection even before selling products or services in the Lebanese market. In January 2013,The Ministry of Economy and Trade launched online trademark registration.

Legal Framework

The new appointments to judicial bodies should strengthen the independence of justice.

Equal Treatment of Nationals and Foreigners

Equal treatment by the judicial institutions between Lebanese and foreigners.

The Language of Justice

The judicial language in the country is Arabic.

Recourse to an Interpreter

It is possible to have recourse to an interpreter.

Sources of the Law and Legal Similarities

The main source of the law in the country is the constitution of 1926 (amended many times, most recently through the Tariff Agreement). The legal system is a mix of Ottoman law, Napoleonic code and civil law. Lebanon has not accepted compulsory ICJ jurisdiction.

Standards

Standards are defined by the Lebanese Standards Institution Libnor. This institute is a member of the International Organization for Standardization ISO.

Classification of Standards

Standards are presented in the following way: LN then EN if it is a national standard, if it is an ISO standard then ISO is written, then the number corresponding to the product's field, then the year of its adoption.

Business Practices

Administrations and Banks are open from 8 am to 2 pm, Monday to Friday. Some banks stay open until 5 pm. Some of them are open from 8 am to 11 am on Saturday. Public administrations close on Friday at 11 am. The liberal professions have flexible hours according to the nature of the work.

Public Holidays

New Year's Day

1 January

Feast of St Maroun

9 February

Labor Day

1 May

Feast of the Assumption

15 August

Independence Day

22 November

Christmas Day

25 December

The Good Friday according to the Catholic rite

The Good Friday according to the Orthodox rite

The Good Friday according to the Orthodox rite

Variable

Aid el Adha

70 days after the end of Ramadan, variable

Achoura

Variable - 1 day

Muslim New Year

Variable - 1 day

Birth of the Prophet

Variable

The day of Ramadan

Variable - 2 days

Holiday Compensation

There is compensation for Labor Day.

Periods When Companies Usually Close

Aid el Adha

2 days, 70 days after Ramadan.

Summer holidays

It is not an official holiday period but everything slows down in August.